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ETFs to Gain on Cloud Computing Growth Amid Coronavirus Crisis

Sweta Jaiswal, FRM

The coronavirus pandemic is going from bad to worse, with more than 1,026,000 confirmed cases and above 53,000 casualties globally, per a Johns Hopkins University data.

The United States continues to top the chart with the highest number of coronavirus-infected cases. It recorded in excess of 245,500 cases with a death toll of more than 6,000. In order to combat the outbreak, President Trump has extended the lockdown until Apr 30. Notably, around 80% of Americans have been put under lockdown as coronavirus cases continue to spike in the United States. Top infectious diseases expert Dr. Anthony Fauci believes the United States will need a nationwide stay-at-home order to contain the spread of coronavirus.

In the current scenario, people have to maintain social distancing and work remotely. Resultantly, cloud computing is emerging as a key technology to fight the battle against coronavirus. Cloud computing and storage have empowered video conferencing, gaming, e-commerce shopping, remote project collaboration, online classes, editing, etc. It is supporting organizations in remotely processing a lot of information, developing and running key applications and services, and also helping employees across the world work together.

Highlighting the importance of cloud computing, Apurva Joshi, Digital Ocean’s vice president of product has said “cloud services are an unsung hero in enabling this massive, sudden shift to a remote-first workforce” (read: ETFs Set to Benefit from Social Distancing, Stay-At-Home).

Coronavirus Spurring Demand for Cloud Computing

Cloud computing is seeing increasing usage globally as it allows data interoperability in a scalable, cost-efficient way by, data collection, processing, analyzing, and sharing across platforms. Before the lockdown, companies were already discarding their own data centers to rent computing from Amazon AMZN, Microsoft MSFT and Google GOOGL. However, this shift is expected to speed up now, as millions of employees are working remotely from home.

In fact, Microsoft Teams currently have more than 44 million daily users, who engage in more than 900 million meeting and calling minutes per day. The company has also seen a mind-boggling 775% surge in its Cloud services in regions with lockdown orders. Google's enterprise videoconferencing tool — Hangouts Meet — is seeing a rise in daily usage. It recently reported that Hangouts Meet registered a 60% increase in usage in the past couple of months.

Cisco CSCO has witnessed the number of meeting minutes more than doubling on its videoconferencing platform, Webex, in March compared to February. Moreover, the company has also witnessed its peak daily usage more than doubling to 4.2 million meetings. Cisco has also witnessed a sharp spike in demand for the collaboration platform. A rival to Cisco, Zoom Video Communications teleconferencing software has seen a rise in usage. Daily active user count skyrocketed 378% from a year earlier as of Mar 22, while monthly active users were up 186%, according to data from Apptopia. Another player, LogMeIn Inc. (LOGM) has witnessed around a 10 times rise in the usage of its videoconferencing and meeting tools from pre-outbreak levels earlier in 2020.

International Business Machines Corporation IBM is also seeing soaring demand for its cloud services and is also confident to meet those. In this regard, Jason McGee, IBM CTO for Cloud Platform has said that “we have the advantage because a lot of our services, they’re containerized, built in a cloud-native way. So we can move workloads around, can easily move workloads to where the capacity exists.”

Amazon’s cloud web hosting platform Amazon Web Services (AWS) has announced an initial $20 million to help accelerate research and development of diagnostic solutions, and the program is called AWS Diagnostic Development Initiative. To begin with, 35 research institutions around the world will take advantage of the AWS program. Alibaba Group Holding Limited’s BABA data intelligence arm, Alibaba Cloud, is aiming to provide medical workers across the world with advanced cloud-based apps to help battle the coronavirus outbreak.

Cloud Computing ETFs to Shine

Here we highlight some ETFs that can gain from the growing demand for cloud computing as the coronavirus outbreak aggravates:

First Trust Cloud Computing ETF SKYY

The fund seeks investment results that correspond generally to the price and yield, before fees and expenses, of the ISE Cloud Computing Index. It tracks the performance of companies actively involved in the cloud computing industry. The fund holds about 62 securities in its basket with Amazon, Microsoft, Oracle and Goole parent company Alphabet making the top four holdings. It has an AUM of $2.05 billion and an expense ratio of 0.60% (read: 6 Industries & Their ETFs to Protect You from Virus in Q2).

Global X Cloud Computing ETFCLOU

The fund seeks to invest in companies positioned to benefit from the increased adoption of cloud computing technology, including companies whose principal business is in offering computing Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), Infrastructure-as-a-Service (IaaS), managed server storage space and data-center real estate investment trusts, and/or cloud and edge computing infrastructure and hardware. The fund holds about 37 securities in its basket having pure-play cloud companies like Zscaler ZS and Shopify SHOP holding the top positions. It has an AUM of $380.9 million and an expense ratio of 0.68% (read: 6 New ETFs That Could be Investors' Favorite).

WisdomTree Cloud Computing ETF WCLD

The fund seeks to track the price and yield performance, before fees and expenses, of the BVP Nasdaq Emerging Cloud Index, an equally weighted Index designed to measure the performance of emerging public companies focused on delivering cloud-based software to customers. The fund holds about 37 securities in its basket, with Zoom Video Communications ZM, Cloudflare NET and Zscaler holding the top positions. It has an AUM of $36.2 million and an expense ratio of 0.45%.

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Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
International Business Machines Corporation (IBM) : Free Stock Analysis Report
 
Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
 
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
 
Shopify Inc. (SHOP) : Free Stock Analysis Report
 
First Trust Cloud Computing ETF (SKYY): ETF Research Reports
 
Zscaler, Inc. (ZS) : Free Stock Analysis Report
 
Global X Cloud Computing ETF (CLOU): ETF Research Reports
 
Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
 
Cloudflare, Inc. (NET) : Free Stock Analysis Report
 
WisdomTree Cloud Computing ETF (WCLD): ETF Research Reports
 
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